Bill Text: TX HB79 | 2015-2016 | 84th Legislature | Introduced

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Bill Title: Relating to exemptions from the sales and use tax and the franchise tax for certain businesses during an initial period of operation in the state.

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced - Dead) 2015-02-09 - Referred to Ways & Means [HB79 Detail]

Download: Texas-2015-HB79-Introduced.html

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84R271 TJB-D
By: Guillen H.B. No. 79

A BILL TO BE ENTITLED
AN ACT
relating to exemptions from the sales and use tax and the franchise
tax for certain businesses during an initial period of operation in
the state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act may be cited as the Texas Open for
Business Act.
SECTION 2. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.3183 to read as follows:
Sec. 151.3183. TAXABLE ITEMS USED BY CERTAIN NEW BUSINESSES
DURING INITIAL PERIOD OF OPERATION. (a) In this section:
(1) "Internal Revenue Code" means the Internal Revenue
Code of 1986 in effect on December 31, 2014, excluding any changes
made by federal law after that date, but including any regulations
adopted under that code applicable to the tax year to which the
provisions of the code in effect on that date applied.
(2) "Qualifying job" means an employment position that
is:
(A) new to and located in the state;
(B) permanent and full-time; and
(C) held by an employee for at least 10 months
during each 12-month period.
(b) The sale to or storage, use, or other consumption by a
new business of a taxable item that will be directly used or
consumed by the business is exempted from the taxes imposed by this
chapter.
(c) A person is a new business for purposes of this section
if the person is a business that:
(1) is primarily located in a county with a population
of 250,000 or less;
(2) is first located and begins doing business in this
state on or after January 1, 2016, regardless of whether the
business is chartered or organized in this state or outside this
state;
(3) is not substantially similar in operation and in
ownership to another business located in this state during any part
of the preceding five years;
(4) is primarily engaged in:
(A) a manufacturing activity described in
categories 2011-3999 of the 1987 Standard Industrial
Classification Manual published by the United States Department of
Labor; or
(B) qualified research, as defined by Section 41,
Internal Revenue Code; and
(5) creates, on or after January 1, 2016, and not later
than the 30th day after the date the business first locates in this
state, at least one qualifying job.
(d) To claim an exemption under this section, a registration
number issued by the comptroller must be stated on the exemption
certificate provided by the purchaser of the item.
(e) Subject to Subsection (f), a person may apply to the
comptroller for issuance of a registration number by the
comptroller. The application must be made on a form prescribed by
the comptroller and include the information required by the
comptroller to establish that the person is a new business as
described by Subsection (c).
(f) A person who meets the requirements of a new business as
described by Subsection (c) must apply for a registration number
not later than the first anniversary of the date the person begins
doing business in this state. The comptroller shall deny an
application received after that date.
(g) A registration number issued under this section expires
on the 10th anniversary of the date of issuance, unless revoked at
an earlier time by the comptroller as provided by Subsection (h).
The registration number may not be renewed.
(h) The comptroller shall revoke and may not reinstate a
registration number issued to a person if the person ceases to meet
a requirement prescribed by Subsection (c). A person whose
registration number is revoked is liable for payment of the taxes
imposed under this chapter on the sales price of each taxable item
for which the person claimed an exemption under this section on or
after the date the registration number was revoked.
(i) The comptroller shall adopt rules necessary to
implement this section, including rules relating to the:
(1) qualification of a person for an exemption under
this section;
(2) issuance and revocation of a registration number
issued under this section; and
(3) reporting and other procedures necessary to ensure
that a person to whom a registration number is issued under this
section complies with this section and remains entitled to the
exemption authorized by this section.
SECTION 3. Section 171.0001(4), Tax Code, is amended to
read as follows:
(4) "Beginning date" means:
(A) except as provided by Paragraph (B):
(i) for a taxable entity chartered or
organized in this state, the date on which the taxable entity's
charter or organization takes effect; and
(ii) [(B)] for any other taxable entity,
the date on which the taxable entity begins doing business in this
state; or
(B) for a taxable entity that meets the
requirements of a new business under Section 151.3183, the earlier
of:
(i) the 10th anniversary of the date on
which the taxable entity begins doing business in this state; or
(ii) the date the taxable entity ceases to
comply with the requirements of a new business under Section
151.3183.
SECTION 4. Section 171.001, Tax Code, is amended by adding
Subsection (d) to read as follows:
(d) Notwithstanding Subsection (a), the tax imposed under
this chapter is not imposed on a taxable entity that meets the
requirements of a new business under Section 151.3183 until the
earlier of:
(1) the 10th anniversary of the date on which the
taxable entity begins doing business in this state; or
(2) the date the taxable entity ceases to comply with
the requirements of a new business under Section 151.3183.
SECTION 5. Section 171.063(g), Tax Code, is amended to read
as follows:
(g) If a corporation's federal tax exemption is withdrawn by
the Internal Revenue Service for failure of the corporation to
qualify or maintain its qualification for the exemption, the
corporation's exemption under this section ends on the effective
date of that withdrawal by the Internal Revenue Service. The
effective date of the withdrawal is considered the corporation's
beginning date for purposes of determining the corporation's
privilege periods and for all other purposes of this chapter,
except that if the corporation would have been subject to Section
171.001(d) in the absence of the federal tax exemption, and the
effective date of the withdrawal is a date earlier than the date the
corporation would have become subject to the franchise tax as
provided by Section 171.001(d), the date the corporation would have
become subject to the franchise tax under that section is
considered the corporation's beginning date for those purposes.
SECTION 6. Section 171.204, Tax Code, is amended by adding
Subsection (d) to read as follows:
(d) The comptroller may require a taxable entity on which
the tax imposed under this chapter is not imposed solely because of
the application of Section 171.001(d) to file an information report
stating the taxable entity's beginning date as determined under
Section 171.0001(4)(B). The comptroller may require the report to
include other information the comptroller determines necessary,
except that the comptroller may not require the taxable entity to
report or compute its margin.
SECTION 7. Not later than December 1, 2015, the comptroller
of public accounts shall adopt rules as provided by Section
151.3183(i), Tax Code, as added by this Act.
SECTION 8. This Act takes effect September 1, 2015.